JULY 20, 2005 — The bipartisan goodwill at Wednesday's Senate Health Education and Labor Committee markup was such that members combined their voices in chorus to unanimously approve a bill promoting health information technology.

They then all harmonized in a round of "Happy Birthday" to one of their own, Sen. Barbara A. Mikulski. "This is what I wish the Senate would be more like," the Maryland Democrat said. "It's a happy day for me."

The Wired for Health Care Quality Act (S 1418), which is expected on the Senate floor [the week of July 25], would establish the public–private American Health Information Collaborative to make recommendations for uniform standards for information technology. Federal programs would have to follow the standards to make computer systems compatible, but the standards would be voluntary for the private sector.

The legislation blends a bill developed by Sens. Bill Frist, R-Tenn., and Hillary Rodham Clinton, D-N.Y., and another by Chairman Michael B. Enzi, R-Wyo., and Edward M. Kennedy, D-Mass.
"Because we share this goal, we have worked together to combine our bills into one that will bring the government and the private sector together to build new electronic pathways for medical data, and thereby provide all Americans with health care that is better, safer and more efficient," Enzi said. "When this is implemented we are going to see huge decreases in error rates," added John Ensign, R-Nev.

Under the bill, competitive grants would be awarded to hospitals, group practices, and other providers to ease adoption of the technology. Grants also would be made available to academic health centers to teach medical students how to use health IT in practicing medicine. The bill also would establish a quality measurement system to pay more to providers who improve the quality of care.

Financing IT
A key issue confronting policymakers is where the money will come from to fund health IT.

Removed from the bill before Wednesday's markup was language that would have eased federal legislation intended to prevent financial inducements by hospitals to doctors to make referrals. The language relaxing the "Stark law," written by Rep. Pete Stark, D-Calif., would allow a hospital to donate a computer system to a physician's practice if the result was to make care safer or more efficient.

Without such a loosening of the law, hoped-for donations of IT to physician practices may be much less likely. And the sum authorized in the bill for grants—$125 million in fiscal 2006 and $155 million in fiscal 2007—is a pittance compared with the tens of billions of dollars needed to wire the entire U.S. health system.

So were high spirits at the markup misplaced? No, according to a Senate leadership aide, who said the language to relax the Stark law falls under the jurisdiction of the Senate Finance Committee and will return once that panel signs off on it.

And as for the relatively small amount of grant money, "our responsibility as the government is not to build the system," the aide said. "The private sector really needs to step up here." And it will, the aide said, because there's a big business case for it.

"The feeling is when the standards are set and the payment incentives are set, the capital will flow," the aide said.
Another issue that must be clarified is a potential conflict between quality performance measures in the bill and those in legislation offered by Sens. Charles E. Grassley, R-Iowa, and Max Baucus, D-Mont., that would tie Medicare payments to quality of care. But Enzi expressed confidence the potential conflict would be resolved.

Meanwhile, Health and Human Services Secretary Michael O. Leavitt told the Senate Budget Committee on Wednesday that the federal government's first priority should be ensuring that health care providers' computer systems are compatible with one another.

Panel Moves to Preserve User Fees
The panel also unanimously approved by voice vote a bill (S 1420) that would preserve industry-paid user fees to help fund Food and Drug Administration (FDA) reviews of medical device marketing applications.

The fees help speed approvals by allowing the FDA to hire more reviewers, but Congress fell short of its funding obligations for device reviews in fiscal 2003 and fiscal 2004. In the absence of congressional action, the shortfall triggers a provision in the Medical Device User Fee and Modernization Act causing the user fee program to sunset September 30.

The measure OK'd by the panel would preserve the user fee program but reduce the yearly fee increases industry must pay for product reviews. It would increase the number of businesses that pay smaller fees by increasing the ceiling of yearly revenues for such firms from $30 million to $100 million. The bill also addresses labeling requirements for single-use devices that are reprocessed to allow subsequent use.

The Senate is expected to vote on the bill early next week, and medical device lobbyists expressed optimism the House would approve the measure before the August recess.

JULY 21, 2005 — Converting Medicare physician payment to a system that pays more for higher-quality care—dubbed by insiders as "P4P" or "payment for performance"—won't protect doctors against major payment cuts if the current "Sustainable Growth Rate" (SGR) formula stays in place, Rep. Nancy L. Johnson, R-Conn., said Thursday.

During a hearing before the House Ways and Means Health Subcommittee, Medicare administrator Mark B. McClellan expressed solid support for payment for performance and agreed the current doctor payment system is not sustainable. But he said nothing in his testimony that gave any encouragement to those hoping for administrative action by Medicare that would greatly reduce the legislative cost of repealing the SGR formula.

Under the current system, doctors are projected to see payment cuts of about 5 percent annually in each of the next seven years.

Johnson has floated legislation that would repeal the SGR formula, which produces payment cuts if total Medicare physician spending exceeds a certain growth rate. Instead, she would increase doctor payment each year based on changes in the Medicare Economic Index (MEI), which tracks changes in the costs of physician care.

But McClellan's written testimony noted that, according to a new administration estimate, the 10-year cost of MEI-based increases would be $183 billion over 10 years, up from its previous estimate of $163 billion.

Moreover, McClellan noted that an administrative change sought by Johnson—a technical change that involves removing physician drug spending from both past and future calculations of the SGR—raises "difficult issues" of statutory authority.

And even if both past and future calculations are removed, the administration's new estimate, unlike its original forecast, says that payment increases may not occur in 2006 "or the succeeding few years."

Another problem is that "prospective or retrospective removal of drugs would increase beneficiary premiums," McClellan said. But he did not rule out the possibility that Medicare's lawyers might ultimately decide drugs could be removed from some or all of the calculations and that his agency would invite comments on the issue in a rulemaking proposal to be issued shortly.

McClellan also voiced optimism that with continued steady effort, Congress and the administration could make significant progress in changing a payment system that he agreed could not stay as is.

JULY 22, 2005 — The Senate passed legislation Thursday night by voice vote that would establish a system of health care providers to report medical errors without fear of the data being used in malpractice lawsuits.

The bill (S 544), which was approved by the Senate Health, Education, Labor and Pensions Committee on March 9, would establish a national patient safety database maintained by the Department of Health and Human Services to catalog the reports and identify regional and national trends in medical mistakes. Under the bill, $25 million in grants would be authorized for fiscal 2006 and 2007 to be used for technology upgrades to help doctors and hospitals avoid errors.

The Senate unanimously passed a nearly identical medical errors measure last year, and the House passed a version in 2003. But the House never appointed conferees, and the effort to clear the legislation died.

However, the House Energy and Commerce Committee approved its own version of the bill (HR 3205) on July 20 and committee Chairman Joe L. Barton, R-Texas, said he expected speedy passage on the House floor.

Both the House and Senate measures were negotiated by Sens. Edward M. Kennedy, D-Mass., and Michael B. Enzi, R-Wyo., with the understanding that the legislation would not shield information now available to lawyers for use in court cases.

JULY 22, 2005 — The quality of medical care delivered in hospitals varies greatly across the country and even within hospitals themselves, according to a new report funded by the Commonwealth Fund.

"These data do not provide support for the notion that 'good' hospitals are easy to identify or consistent in their performance across conditions," the authors state in a news release. They recommend expanding data collection efforts to include more conditions and focusing quality improvement efforts on a larger number of hospitals.

In the study, published Thursday in the New England Journal of Medicine, researchers at the Harvard School of Public Health and Boston's Brigham and Women's Hospital examined hospital quality data from 2004 to examine areas such as how well hospitals perform and how consistence performance is across regions. Researchers analyzed data reported to the Centers for Medicare and Medicaid Services (CMS) under the National Quality Alliance.

The research team looked at 10 measures that reflect quality of care of three major clinical conditions: acute myocardial infarction, congestive heart failure, and pneumonia. The indicators included administering aspirin within 24 hours of arriving at the hospital, use of an angiotensin-converting enzyme, or ACE, inhibitor, and pneumococcal vaccination.

After adjusting for various hospitals and area characteristics, researchers found that academic hospitals had higher performance scores than nonacademic hospitals, while not-for-profit hospitals did a better job than for-profit hospitals. Hospitals in the Midwest and the Northeast outperformed those in the West and South.

Within hospitals, quality also was inconsistent, the authors said. For example, only 33 percent of hospitals in the top one-tenth of performers in treatment of acute myocardial infarction, for example, were in the top one-quarter of hospitals in treatment of pneumonia.

JULY 21, 2005 — Legislation that would make it easier for small businesses to band together to purchase insurance and bypass state mandates is "a license to steal," says a study released Thursday.

"The consequences are predictable: bankruptcy, delayed or forgone medical care, and loss of coverage for America's businesses and workers," said report author Mila Kofman, an assistant research professor at Georgetown University's Health Policy Institute.

The report is referring to a bill (HR 525)—expected to pass the House next week—that would allow association health plans (AHPs) to bypass state regulation in areas such as mandating insurance coverage for specific treatments and procedures. Exempting AHPs from state laws, advocates say, would make it easier for small businesses to join forces and cut better deals with insurers when purchasing health care coverage for employees.

But Kofman said that the lack of state regulation of AHPs creates an easy opportunity for scam artists to come in, get their money and go out of business. "In law enforcement circles, these are called 'cash cows,'" she said at a press conference.

The legislation would prohibit state regulators from shutting down fraudulent AHPs and would stop states from making it illegal to sell phony insurance to federal AHPs, Kofman said.

The bill would require the Department of Labor to monitor AHPs, a responsibility the agency cannot handle, Kofman said. And the bill would rely too heavily on self-reporting and self-regulation by the plans. "Crooks won't be notifying the feds of lying, cheating, and stealing," she said.

Between 2000 and 2002, fraudulent AHP-like plans affected more than 200,000 policyholders and left businesses and workers responsible for $252 million in medical bills, Kofman said. While the states shut down 41 illegal operations selling coverage through phony and real associations, the U.S. Labor Department shut down just three, Kofman found.

Rep. Sam Johnson, R-Texas, the leading sponsor of the House AHP bill, said such plans "protect people and increase the insured. The last time I checked, the Department of Labor has done a tremendous job monitoring the health plans of big business. I'd like to see small business have that same advantage—and their employees insured," he said in a statement.

Groups such as the U.S. Chamber of Commerce, the National Federation of Independent Business, and the National Association of Manufacturers are pressuring Congress to pass the AHP legislation. They say such plans would help reduce the number of uninsured Americans by giving smaller employers the same market clout that larger businesses now enjoy when they purchase health coverage for their workers.

While the legislation has passed the House several times and is expected to do so again, it faces more opposition in the Senate, where Sen. Olympia J. Snowe, R-Maine, has introduced a similar bill (S 406).

Kate Sullivan Hare, executive director of health care policy for the U.S. Chamber of Commerce, said the AHP measure includes a number of licensing and solvency requirements to help prevent fraudulent companies from offering coverage. Hare also said the Department of Labor would add staff to help monitor the AHPs if the legislation became law.

"There's nothing any of us can do about the scam operators—it's buyer beware," Hare said. "They're out there now."

Jill and Brent Burgess, who attended the press conference with Kofman, were the victims of one of those fraudulent operators. The couple, which operated their own business, lost their health care coverage for themselves and their three children when the company they bought insurance from was shut down for operating illegally, Jill Burgess said. Saddled with $30,000 in unpaid medical bills, her family had to file bankruptcy. "There was no other way out of this nightmare," she said.

Kansas Commissioner of Insurance Sandy Praeger said there will be more victims like the Burgess family if Congress approves the AHP bill. "Simply put, allowing federal AHPs to operate outside the authority of state regulators will expose consumers to more fraud and insurance scams," she said.